Contractors hoping to protect their right to file bid protests got much of what they wanted in the conference report for the fiscal 2019 National Defense Authorization Act, which also contained several provisions to streamline the Pentagon’s acquisitions.

In reconciling the two chambers’ bills, House members accepted a Senate provision to require the Defense secretary to study the frequency and effects of bid protests related to the same contract award filed at both the Government Accountability Office and the Court of Federal Claims.

Some contractors had previously objected to a Pentagon request for curbs on protests some consider “frivolous” by giving companies a deadline for filing a second one. Instead, Defense must conduct the study within 180 days and also establish a data collection system “to better track and analyze bid protest trends in the future,” a joint explanatory statement said. For contracts of less than $100,000, the Pentagon must establish by Dec. 1 an expedited bid protest process.

For the first time in several years, the version of the FY 2019 National Defense Authorization Act (NDAA) that just passed the Senate does not contain any major reforms to limit bid protests.

But the bill the Senate sent to the conference committee process does contain two provisions aimed at bid protests. Although they are minor, they portend and may lay the groundwork for future attempts to change the protest process.

Both provisions call for further study of issues addressed in the RAND Corporation’s January 2018 bid protest report.

The deal was unusual not just for the extraordinarily high price tag, but for how it was handled. Instead of following traditional, competitive procurement rules, officials used something called a “production other transaction agreement” crafted by the Pentagon’s innovation outpost, the Defense Innovation Unit Experimental (DIUx). This essentially allowed the department to make the award based on the success of a prototype developed by REAN Cloud, thus bypassing the government’s expensive and time-consuming traditional procurement process. It was a bold move, and to many observers, it offered a far more efficient way to purchase technology — where traditional procurements can take years to play out, OTAs can be conducted in a matter of months.

Not surprisingly, some traditional federal contractors weren’t happy. One of them, Oracle America, filed a protest with GAO, and the watchdog agreed with the company that the Pentagon’s use of other transaction authority was improper. GAO’s decision was a blow to many officials desperate to reform the government’s antiquated procurement practices.

GAO’s much-anticipated decision in Oracle America, Inc. confirms that GAO will not hesitate to review the details of an agency’s use of its Other Transaction Authority (OTA) in lieu of issuing a procurement contract.

GAO determined that the US Transportation Command (TRANSCOM) both: (a) failed to properly provide for a follow-on production contract in its initial “prototype OTA” instrument, and (b) issued its sole-source production order before the prototype was complete, in violation of the requirements of the statute that provides OTA.

The Oracle decision acts as a shot across the bow to agencies exploring OTA agreements as alternatives to traditional contracting. OTA is not new, but the recent advent of using OTA for follow-on production contracts, combined with increased government interest in using creative alternatives to traditional procurement procedures, has made OTA agreements particularly popular in recent years. While GAO will not review an agency’s award decision once it properly elects to utilize an OTA agreement, GAO will examine the transaction to assess whether the agency properly chose to use an OTA agreement instead of a procurement contract. That is the context in which GAO sustained Oracle’s protest of TRANSCOM’s OTA award. GAO did not seek to limit TRANSCOM’s ability to use OTA, and specifically declined to find that the agency was obligated to use FAR-based procurement. Rather, GAO identified specific process flaws and implied that had the agency written its prototype OTA award slightly differently, and waited slightly longer for completion of the prototype project before issuing its follow-on production order, there may not have been a problem from GAO’s perspective.

The Oracle decision does not prevent any agency from seeking to obtain the flexibility and lower administrative burden that comes with OTA, but instead cautions that GAO will not shy away from policing compliance with the strict letter of the statutory provisions that provide OTA.

Seven months after its original award, the $50 billion Alliant 2 contract vehicle has survived four legal protests and received an official effective date, the General Services Administration announced June 5.